For this episode, we sit down with Tony Botos, Director of Logistics at The Scotts Miracle-Gro Company, and David DeMarais, Director of Operations at DHL Supply Chain, to discuss how warehousing and transportation come together to create a holistic supply chain operation.
For this episode, we sit down with Tony Botos, Director of Logistics at The Scotts Miracle-Gro Company, and David DeMarais, Director of Operations at DHL Supply Chain, to discuss how warehousing and transportation come together to create a holistic supply chain operation.
Will (00:11):
Welcome to All Business No Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in Contract logistics. I'm your host, will Haywood. This is a place for in-depth discussions on the supply chain challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. This episode is the grass is greener on both sides. Examining supply chain integration with Scott's Miracle Bureau, we are joined by Tony Botos, Director of Logistics at the Scott's Miracle Grow Company. And David DeMarais- Director of Operations, DHL . Let's dive in.
Will (00:50):
Uh, welcome to you both. Very happy to have you with us today. I wondered if we could start just by doing, uh, introductions. Tony, can you, can you tell us, you know, who you are, uh, the organization you work for and the role that you played there?
Tony (01:04):
Yeah, thank you. Will. I appreciate D Hhl having me on today. So, um, yeah, a little bit of background about myself. Uh, worked for Scott's Miracle Grow now, uh, been with supply chain, uh, in the industry for about 19 years, 15 years with a wholesale food distribution company in the last three years with Scott's. So I've had, you know, various roles, primarily in the distribution operations side from a frontline leader up to vice president of operations, overseeing the network. And, uh, my previous role. And then with Scott's, I have, uh, responsibilities on the logistics side. So I, I started the, the organization into the warehouse operations, similar to my background previously. And then transition over to the logistics side. I oversee about 200 million and spend across different modes of transportation, uh, in this world. And, and, uh, happy to be here.
Will (01:57):
Great, great. We'll come back to the transportation thing here in a, in a little bit. David, can you do the same thing? Please introduce yourself.
David (02:05):
Yeah, absolutely. Thanks, will. And, and thank you Tony for joining us. Uh, my name's David Damaris. I'm an director with D H L. Primary focus and responsibility is in the Chicago campus, but what we call the Chicago campus and the broader Midwest region. I've been with the company for going on 24 years now in various functions. I've, uh, been, uh, in, in a couple different geographic locations in the Midwest and the Southwest, and have responsibility for, uh, eight different operations in the broader Midwest area.
Will (02:41):
Super. So, you know, there, our subject today is, you know, the relationship between, uh, d Hhl and Scott's and some of the, uh, services that, that, uh, DHL provides an on behalf of Scott's. And then a little bit more about Scott's business. So, David, since you've got such a nice tenure here, can you, um, maybe give us a little history of how the two organizations have, um, have worked together?
David (03:04):
Yeah. Uh, so D h L and Scotts have been business partners for, uh, quite some time, 20 plus years, you know, and, and we've operated dcs. So currently we operate in Chicago and Westfield, Massachusetts. In prior years, we've operated in other locations and, and just we've, we've ebbed and flowed with the, uh, with the changes of the Scott's overall distribution network. Uh, we've been able to flex our footprint on behalf of Scott's during extremely busy time. So most recently post covid or, or call it, right in the middle of Covid, we were up to, uh, four buildings in the Chicago land area and quickly consolidated it to, to three and then to two. And our current footprint is one. And we, and while uh, was going on, we also maintained the one foot print in, in Westfield, mass. But we've, we've evolved over time with Scott's, um, and we've continued to, uh, look for opportunities to just provide strategic growth and, and solutions to Scott's as a customer of ours. Um, the, that includes, uh, innovation, uh, service improvements, uh, just different offerings. Um, so we, as you know, we, we, our core competency is warehousing and distribution, but we also have transportation in our co orial of, of services along with packaging, e-commerce, and a number of different things. So, um, it's been a great relationship. I would truly call it a partnership between the two organizations. And, uh, we've been doing business a long time and, and, uh, would like to continue on that path.
Will (04:48):
Great. Tha thanks for that, David. That's, that's good backdrop. Uh, so Tony, I I wanted to touch on what one of the things that, uh, that David mentioned around Covid, and I know that, that affected the sort of DIY brace affected companies like Scott's. I wonder if you could talk a little bit about what the effects on the supply chain organization were sort of going into Covid, getting through it, and then, you know, coming out of it here in the last year or so.
Tony (05:16):
Yeah, it's, uh, yeah, where do you begin with Covid <laugh> and the impact that it had on supply chain? It's, um, yeah, the pandemic, you know, it's, it's caused a lot of pressure on supply chain worldwide and really just the demand on, on goods and services really increased, you know, through covid. And so kind of going back to my distribution time, so I was in distribution on the first side of, of the Covid pandemic coming through and kind of ended more on the logistics side, on the, on the backside. So I remember being in warehouse operations, probably similar to David, looking at, you know, how do we protect our people, number one, you know, and, and in doing so, you had to establish a lot of protocols. You had to create separation between shifts and barriers and all of those. When you're, when you're a warehouse operator, you think about the impact that that has on your operation and your ability to, to move freight through and, and do that with a lot of, uh, productivity.
(06:10):
So you have some productivity loss that happens there. And so, you know, how do you adapt to that? And so then you go to the logistics side, all that demand variation just occurred, you know, over a, a couple years, uh, you know, ports were shut down, which really impacted domestic transportation, the efficiency, uh, from west coast, east coast, and vice versa. So there was a lot of disruption on the, on the logistics side as well. Um, and so when I entered the role, uh, on the logistics side, it was really on the tail end of that. It was still, uh, not balanced, uh, across the board. And we were, we were facing really truckload conditions where for every one truck that was available, we really had a demand. Pretend, you know, we needed a lot more, uh, capacity than what was available. You know, we had about 50, uh, carrier partners, if not more, trying to help service our account and really take quick action.
(07:04):
You know, from, from my perspective, you know, we had a lot of carrier partners, uh, that we were focused on and driving to meet the end needs of the customer. And we really changed our approach to more of a strategic partnership that really drove a high service level. So we tried to consolidate a number of our carriers, and we worked with a word volume, uh, with the service expectation that we have. You know, we're a, we're a high service, um, model, and Scott's, we always expect our product to be in the right place at the right time for end consumers. And so we really had to leverage our, our relationships pretty strong with our carrier partners, offset the, the pandemic and, and just the, the variability and demand that we had. David,
Will (07:44):
From, from the three PL standpoint, I know you talked a little bit about what you saw from a utilization or, um, inventory perspective. How were you working with Tony and his colleagues through the pandemic talk?
David (07:59):
Yeah, I mean, during that pandemic time and the, the Scott's business saw tremendous growth, and that's what I mentioned kind of at the top of the call, the, the footprint expansion was, was, especially in Chicago, was, was significant growing on buildings. And, and we were already in the process of the, of facility consolidation with the new building in Shanahan, which if, uh, uh, if you're not familiar, is, is probably call it 80 minutes south of, uh, the city, if you will. Uh, typical distribution hub. There's a lot of distribution centers in that area. But, but it was intended to consolidate the three dcs that were in Poland Brook, which is a neighboring suburb of Chicago. And, and during that time, the business was, was, was huge. It was, you think about the impact of covid and, and the number of people at home and, and not necessarily spending discretionary funds in in other areas, they, they invested it back into their homes.
(09:01):
And, and, and the Scott's product certainly benefited from that. In addition to the facility movers, we also popped up additional overflow space in the Chicago area, um, all to be able to handle just the, the tremendous growth that we saw on, on the inventory build side. And then of course, the, uh, the output and shipping side that, that went along with, um, with the, with the push. And the Scott's business is very seasonal. So if you think about the Scott's product line, um, and the big sellers, I mean, they're, they're, they're very diverse in terms of products, but the big ticket items that most people think of are the fertilizers, the soils, the seeds. Certainly there's others, but those are the ones that typically have the, the most seasonal impact. And that span typically starts, you know, kind of late in the calendar, uh, as, as what we would call load in as the inventory build comes in.
(09:58):
And then it just goes on the outbound side as, as the, uh, the retail locations build up through inventories and anticipation of the spring push. So, and then from there, you just have the, uh, kind of the point of sale replenishment that happens as, uh, as the stores draw down the inventory as customers purchase goods. All that said, big wind up, but I mean, I, I think we were able to really scale up and support, you know, this tremendous growth that, that the Scott's business had during, call it the Covid boom. And since then, um, things have, uh, changed a bit. So they're, they're not quite as, uh, uh, obviously our footprint is, is smaller in, in Chicago, and so we, we've just like, we were able to open up additional buildings and, and, and ramp up overflow space once that footprint was no longer needed, we were able to, uh, exit those facilities and, and continue to operate with a smaller footprint all without interrupting service. Yeah.
Will (10:59):
Great. Okay. So Tony, when you say logistics, you're talking about transportation, right? A hundred percent, yep. Okay, good. So, uh, and, and that goes a new role for you within the last couple years, right?
Tony (11:12):
Yeah, yeah. And you know, my history, I, I worked with private fleet and dedicated carriers, uh, but coming into the Scott world, we use multiple modes of, of transportation, so it definitely widened my, uh, logistics experience and stretched it in, in a lot of ways.
Will (11:28):
Good, good. Well, I wanna spend a little time with you on that because we, we haven't really touched on transportation all that much on this podcast, and I think, you know, following in the learning that you've done on the job, um, you could share with our listeners a little bit about, you know, how the transportation market works and from the standpoint of a shipper to different things that you do, uh, to provide the service that is needed at the right cost, and, you know, um, right product, right, right place, all that. So, um, I guess at the top, you said you have about a 200 million, uh, transportation spend.
Tony (12:00):
Correct.
Will (12:01):
Okay. And so how does that break down?
Tony (12:04):
Yeah, we, um, we, well, we're primarily truckload across the board. Uh, we do a lot in intermodal, you know, roughly about 25 million in intermodal. And these, these numbers can obviously flex, you know, as the zero progress, and I'll kind of get into that a little bit. But we have, you know, l t l, uh, western truckload that we send down, 37 million ish, 40 million at at times. Uh, and we also operate with a private fleet in a couple of our locations. So primarily our spin is around truckload. I know I'm throwing out a lot of terms here in transportation at if this is a, a shipper focus, you know, may not be familiar with that. I can certainly relate, you know, what stepped to the role. It was, uh, you know, we're thrown out a lot of terminology there that it's like, okay, what does this really mean? How do you leverage it? How do you understand where to apply it? And then you throw in the fact that we're a highly seasonal business, so that also adds an extra variability and, and, you know, it's a weather based, uh, in a lot of cases too. So you have to, you know, react and, and, uh, be flexible in the moment as well.
Will (13:03):
Right. Okay. So let, let's spend some time with a couple of those, uh, of those charms. So, and maybe, maybe I'll ask the question this way. Why does one use, uh, intermodal shipping? Meaning, or what does that mean, first of all, and why do you use it? What are the pros and columns?
Tony (13:21):
Yeah, yeah, absolutely. So I think you first need to understand your product, you know, what is your core product for us, you know, we're a, we're a non-perishable, non hazmat type product. We're shipping finished goods in most cases, uh, across the, the network. And so understanding that, uh, gives you the opportunity to understand intermodal and what advantages that can add to your portfolio from a carrier standpoint. So that's leveraging, you know, containers on the rail, and in most cases, we're moving out from our manufacturing plants to our distribution centers. It's critical in those moments when, when you think about rail, uh, there's an extended lead time that's associated with moving product on the rail. Uh, but that's also coming in at a, at a lower cost. You know, your, your fuel cost is, is much less when you're shipping intermodal, uh, and the rail, uh, but you also have to look at your transit time.
(14:12):
So a lot of times we're working with our planning partners, ensuring that we're producing further in advance, taking advantage of rail wherever possible. Um, and if we're not moving product from our manufacturing sites to our distribution centers on rail, then we're using asset-based carriers. So asset-based truckload carriers where they typically have a drop trailer, they'll put that drop trailer into a warehouse operation that allows our manufacturing, uh, team to continue to produce and have good product flow, and then we can use that asset to move that out to our distribution centers like D Hhl and Chicago and Westfield, and our partnership there. So, you know, first is to look at, you know, how do we leverage intermodal as much as possible. Now granted, there are not as many lanes, uh, via intermodal as you would have on a trip typical, uh, truckload. Uh, so you have to be cognizant of that, uh, and work with your, uh, your partners there to, to find those right synergies. And then internally you're working with your planning team to understand exactly how much lead time is, is needed, and ensure that, that we move that with that as a first option. Um, then you go to asset-based carriers and then you go into brokers, you know, thereafter. So, you know, primarily to answer your question about intermodal that, you know, it's, it's primarily used for our manufacturer and a distribution center, not necessarily out to our customers that, that can't handle that type of freight.
Will (15:33):
Okay. Got it. David, um, how do you from the, the warehousing seat interact with the transportation, either providers or, um, folks who manage it like Tony? Yeah,
David (15:45):
I mean, we work with those groups often daily. Uh, as a matter of fact, I mean, it's from scheduling doc appointments to pick up appointments, uh, on the outbound side. So, and, and then there's the, um, the brokerage firms as, as Tony mentioned. So there's daily communications that that happen been to facilitate all the movement, both in and out. And it, it really, whether it's intermodal, whether it's asset based or brokerage, it, it's the, you know, there's still the same processes that need to be followed in terms of scheduling dock appointments, ensuring on time delivery and pickup and, and all of those things. So it's, it, it's really managing the flow and especially in the, in the, you know, the peak times when there's just high demand on turn and, and ensuring flow is flowing the way it should, you know, we need the product in the warehouse and inventory so we can turn around and ship it out and meet customer orders via the requested timeframes and, and, and ship at, at a high fill rate.
(16:49):
So it's definitely a daily partnership, the design going and, um, it, it's actually pretty impressive to see when, when the sites deliver the peak. I mean, it's the, the Scott's warehouses are not what you would consider kind of your typical consumer good, you know, steady state, you know, maybe a couple seasonal blips here and there. I mean, it, it really goes from zero to 60 for the peak period, or, you know, call it four to six months. And it's a lot happens in that condensed timeframe, and it really needs to happen almost flawlessly in order for everything to, um, to be successful. So it's, it's, it's really neat to, um, to watch our teams execute and certainly, you know, our transportation partners are a big part of that process,
Will (17:35):
So managing just the, the ups and downs in a normal market are challenging, it sounds like. But Tony, when you took your role, you, you probably took your role in the most difficult transportation environment maybe in the last couple decades, and it's, it's changed a lot since, you know, day one for you to today. Um, I wondered if you could kind of talk through what was the environment like when you started, and then how did that affect your decision making in terms of what mode of transportation you were, you were resorting to versus today, and just what, what some of those variables are?
Tony (18:09):
Yeah, it's, it's a, it's a good call out. You know, it's, it has changed, it's shifted even within the last 18 months, uh, from my perspective. And you, you typically see this cycle, the normal cycle is, you know, there are typically two years where you're pressed like capacity and rate, you know, uh, it continues increase, and then you have this lag of, you know, one year where rates are down, and you'll call that typically a shipper's market, and you have plenty of capacity to go after. And so, you know, we, we started to see that downward slope, you know, at the end of the pandemic, and it's still, it's starting to stabilize and it's starting to bottom out at this point. Um, so, you know, what I've learned in this role is really how close you have to be to the market. You know, the market really drives your decisions, and when I stepped into the role, there was a need for, you know, asset-based carriers and dedicated fleets and really leveraging the need to have equipment available for manufacturing and for our customers.
(19:04):
And I, I take a step back and look at who we are as a company. You know, service is number one, so we can't jeopardize, you know, our service to our customers, and we have to insulate ourselves from that perspective. Now that the market is in a more stable, uh, way, we're leveraging those brokers as, as David described, and so, you know, those brokers, um, you know, it's one point of contact. They leverage a lot of owner operators and other carriers to, to manage our business. We have that zero to 60 effect that David talked about, and that could change from one week to another based on, you know, weather patterns. And that allows us to expand and contrast our carriers on a moment to notice those brokers, and in most cases are only one-way deliveries outbound. So we don't have to find, you know, a feedback loop to, to get those carriers back into those manufacturing sites or distribution centers.
(19:54):
So that helps us drive cost down, uh, from that standpoint. So we, we've certainly taken advantage of the market gone, uh, down the path of more broker heavy that allows us to look at rates, uh, at a much more competitive level while still maintaining our service. But we're also talking about what's gonna happen in the next year, next two years. And, you know, we're coming up on, um, on a bid, uh, that we do every year, uh, in Scott's and looking at our strategy and saying, you know, do we need to insulate ourselves as, you know, this market rebounds, call it, you know, maybe first quarter or second quarter of next year, and look at, you know, different options that help insulate us from a service standpoint. So you're, you're constantly, uh, adapting your strategies, and I've seen that already occur over the last 18 months in Israel.
Will (20:37):
Yeah. It's sort of trial by fire, right? Yeah. <laugh>. Yeah. And David helping, um, shippers think through, um, whether it's, you know, kind of network or when do you make the decision to lock in rates versus, uh, go to the brokerage market? Is that something that you do for Scott's or, or else elsewhere?
David (20:58):
Yeah, not, not necessarily with the current relationship with Scott's. I mean, it, those decisions are, are primarily with, you know, well basically exclusively with Tony and his team. Uh, so we would, we would not influence, you know, whether we would go asset brokerage, you know, model that sort of thing. So it, it's, but those are not decision rights that we have as, you know, d Hhl as a company does ha have a transportation solution. So we do brokerage, we do dedicated fleets, um, and, and the whole suite of transportation. So I mean, uh, certainly with other relationships, we, we do engage at a more detailed than involved level with, with those types of decisions in the current, uh, business relationship with Scott's, we, we don't do that today.
Will (21:45):
Gotcha. So Tony, kind of looking into your crystal ball, if you're thinking about, you know, what is a really a pretty shipper friendly environment right now, when do you start to pi pivot to kind of lock things in, uh, on a longer term perspective before capacity starts to tighten again? How do you how do you sense that? I may, I mean, I, I, I guess there's some art and science in that <laugh>.
Tony (22:09):
Yeah, it's a, it's a little bit of an art, a little bit of a science, um, a little bit of mistakes and, you know, sometimes getting it right. So, um, yeah, for us, you know, we do in the annual bid, um, and we do that during our non peak time. So you know what, we'll consider summer before we go into fall. And so we're making strategy decisions going into that bid. You know, we do a couple bids out there. We look in our entire portfolio freight spend, and we'll put that out to market. We'll have some strategies going into it. Um, and then we will insulate ourselves, you know, on what, what we believe the market to show us. And so we use a lot of analytics. I mean, we're heavily involved on the, I'll call it realtime analytics on the operational excellence, uh, standpoint and managing the day-to-day, but also looking at some strategic platforms and, and market analysis that help us forecast what we're gonna see over the next year, because, we'll, we'll make a decision by the end of September on what we believe will occur over the next three to four months, and that, that can be challenging in the transportation market to project what, you know, what will happen in the future.
(23:16):
And so, you know, we've, we've gone through a transformation here where, you know, we're, we're focusing a lot on technology and helping it allow that, you know, data-driven decisions to help us understand and forecast much better. And I would say, you know, on a warehouse operation side, you know, definitely much further along from an industry standpoint and transportation has lagged a little bit from, you know, tech standpoint, that that's greatly changed, probably even more so over covid just because of the variability and demand and, and the need to, to have that crystal ball and, and, you know, if it's not accurate, then you're a adapting in a moment. So I've seen a lot of other shippers do the same thing and getting heavily involved in that analytics to help us make the good decisions.
Will (23:59):
Yeah, interesting and interesting. The transportation's lagged the, the warehouse market, given there's a lot more spend in transportation than there is in warehousing.
Tony (24:09):
Yeah, and you know, from my past experience, you're, you know, in the warehouse operations, you're in the box, you see everything, you see it every single day. Transportation's kind of the unknown as it's out there. And, and so there's been a lot of, you know, great, you know, companies that have come along to provide, you know, real-time feedback, knowing exactly where drivers are, your carriers are, uh, performance both on, you know, pickup destination, power transacting and e d i and a p i connections that allow us to have full visibility. Um, that is certainly over a call of the last five years. It's just, you know, leapfrogged and transportation and it, it's really exciting to see that, uh, move forward. So it's fun to be part of, uh, that transformation from a technology standpoint and, and always looking at what's out there, uh, to see how this, how does that fit within our organization.
Will (24:58):
Excellent. Excellent. Well, listen, I really appreciate, uh, your time, Tony and, and David for, for being with us today and talking a little bit about transportation. Wish you luck as you try to forecast what's coming up over the next 18 months or so, and, um, and hope that you, you make the right choices.
Will (25:20):
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